The Present Value of an Annuity Is

question 11

Multiple Choice

The present value of an annuity is
1. larger the greater the rate of interest
2. smaller the greater the rate of interest
3. larger as the number of years increases
4. smaller as the number of years increases

• A)1 and 3
• B)1 and 4
• C)2 and 3
• D)2 and 4

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Definitions:

Total Fixed Cost

The sum of all costs that do not change with output level, including rent, salaries, and insurance.

Short Run

A period in economic analysis during which at least one input, such as plant size or capital, is fixed, limiting the ability to adjust to demand changes.

Long Run

A period in which all factors of production and costs are variable, allowing for full adjustment to changes in the economic environment.

Specialization

The process of focusing effort and resources on a limited number of activities, goods, or services to gain a comparative advantage in production.